If you are handling your own debt collections in house, then you already recognize the need to periodically send demand letters to delinquent customers.
Many business owners would rather use the "gentle" approach by first sending a friendly reminder. The idea is this may serve to help "jog" the customer's memory of the past due bill.
While these can have varying degrees of success, they can still be improved upon by learning a few tips to help you write a more effective demand letter. This will encourage your customers to pay you sooner, rather than later.
1. Wording That Is Professional
Your demand letters should never contain any harassing, threatening or abusive language. Nor should it even imply threats. Some customers might become defensive if they perceive they're being threatened. Whether or not you meant to threaten, if interpreted as such, it can result in possible legal retaliation. At the very least, it will not put them in the mood to want to pay you.
Your collection letters should be worded professionally, with communication that is non-personal, emotional, stay on the point, and communicate clearly that the letter is a reminder of an unpaid debt. This usually proves to be enough of an encouragement to get the customer to pay the bill.
2. Exactness is Key
Your collection letter should state the exact amount the customer owes and when the payment was due. You may also want to mention the services or goods provided as a reminder, although this isnt always necessary. Where possible, try to keep your letters brief and to the point.
3. Payment Arrangements
If some customers are avoiding all contact, you might want to offer a payment arrangement. They might be ashamed of admitting financial difficulties, and a payment plan with smaller payments over time might be more financially manageable for your customer.
They could become more cooperative after being offered payment arrangements, because smaller payments are less financially stressful.
4. Penalty Fees
Mentioning the possibility of late fees or penalties might be a further incentive for some customers to pay. Your demand letters could mention tacking on additional late fees if the account continues to remain delinquent. Faced with the possibilities of still more fees, some customers will find the money needed to pay the debt.
By receiving smaller payments over time to your business, you can increase the cash flow by following these suggestions. At the same time, you're encouraging your delinquent customers to pay their past due bills.
If youre dealing with your debt collection procedures in-house and writing your demand letters yourself, you must not imply that a debt collection agency is involved in the collecting.
You also have to exercise caution, that none of your language contains any threatening language of any kind. For instance, you cannot threaten legal action if you're not actually working with an attorney. You can't threaten to garnish a debtor's wages, nor can you imply that you're working with a government agency to collect your debt.
It also violates federal statutes to make your demand letters look "official", and like they've been written by any federal or state agency, or from a court.
Use your own regular business stationary and keep your writing tone professional and encouraging. As a general rule, send two letters approximately 30 days apart. If youre still not meeting with any success, then it may be time to consider alternative methods of debt collection, which may include appointing an agency to assist your collection methods.
Many business owners would rather use the "gentle" approach by first sending a friendly reminder. The idea is this may serve to help "jog" the customer's memory of the past due bill.
While these can have varying degrees of success, they can still be improved upon by learning a few tips to help you write a more effective demand letter. This will encourage your customers to pay you sooner, rather than later.
1. Wording That Is Professional
Your demand letters should never contain any harassing, threatening or abusive language. Nor should it even imply threats. Some customers might become defensive if they perceive they're being threatened. Whether or not you meant to threaten, if interpreted as such, it can result in possible legal retaliation. At the very least, it will not put them in the mood to want to pay you.
Your collection letters should be worded professionally, with communication that is non-personal, emotional, stay on the point, and communicate clearly that the letter is a reminder of an unpaid debt. This usually proves to be enough of an encouragement to get the customer to pay the bill.
2. Exactness is Key
Your collection letter should state the exact amount the customer owes and when the payment was due. You may also want to mention the services or goods provided as a reminder, although this isnt always necessary. Where possible, try to keep your letters brief and to the point.
3. Payment Arrangements
If some customers are avoiding all contact, you might want to offer a payment arrangement. They might be ashamed of admitting financial difficulties, and a payment plan with smaller payments over time might be more financially manageable for your customer.
They could become more cooperative after being offered payment arrangements, because smaller payments are less financially stressful.
4. Penalty Fees
Mentioning the possibility of late fees or penalties might be a further incentive for some customers to pay. Your demand letters could mention tacking on additional late fees if the account continues to remain delinquent. Faced with the possibilities of still more fees, some customers will find the money needed to pay the debt.
By receiving smaller payments over time to your business, you can increase the cash flow by following these suggestions. At the same time, you're encouraging your delinquent customers to pay their past due bills.
If youre dealing with your debt collection procedures in-house and writing your demand letters yourself, you must not imply that a debt collection agency is involved in the collecting.
You also have to exercise caution, that none of your language contains any threatening language of any kind. For instance, you cannot threaten legal action if you're not actually working with an attorney. You can't threaten to garnish a debtor's wages, nor can you imply that you're working with a government agency to collect your debt.
It also violates federal statutes to make your demand letters look "official", and like they've been written by any federal or state agency, or from a court.
Use your own regular business stationary and keep your writing tone professional and encouraging. As a general rule, send two letters approximately 30 days apart. If youre still not meeting with any success, then it may be time to consider alternative methods of debt collection, which may include appointing an agency to assist your collection methods.
About the Author:
David P. Montana has been a renowned industry expert, business consultant and writer in collection agencies services for three decades. He offers more valuable tools and resources on writing an effective demand letter.
![Reblog this post [with Zemanta]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_sAQNXXANaVrkp3gmESGNAwVtOpZDXJPqreNMqX60X3uLO1bELrKnPT-wlcwFJY3zJgXRGcIpA2Y9broOM_JfZO_AbMs2SGIxkqygIfWYzfVjRb8XnfFF0Jc6wRE6kQ0UC-MTzT1eiN0F0pEymCAa3f=s0-d)
![Reblog this post [with Zemanta]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_vDFKnmnNaTTB61zJxr5UDuclORE9tCVJ4Xk-_xrnYBM7fESyhTizoAmT55mUuLUyURIQXgXOELLZ6pwf_i9g3-zgjxGQtDlJjiWhz8za1HZww3R8Cvt7PQ5X5FbcQvqJYClVuv4bPAZ8n-Q_Q4Djna=s0-d)
Posts
